Carmen Estrades

A Global Assessment of the Economic Effects of Export Taxes

This study has been undertaken to understand and evaluate the potential negative consequences of export taxes which are implemented by many countries today and which are not disciplined by any international agreement. This paper uses a new detailed global dataset on export taxes at the HS6 (Harmonized System 6 level) level and the MIRAGE (Modeling International Relationships in Applied General Equilibrium) global computable general equilibrium model to assess the impact of export taxes on the world economy. We find that limitations on export taxes would have worldwide effects: the average export tax on global merchandise trade was 0.48 percent in 2007, with the bulk of these taxes imposed on energy products. The removal of these taxes would increase global welfare by 0.23 percent, which is a larger figure than the expected gains from the World Trade Organization’s Doha Development Round. Both developed and emerging economies, such as China and India, would gain from such policies, even if they currently impose export taxes. Medium and small food-importing countries without market power (such as the least-developed countries) would also benefit from the elimination of export restrictions, especially during food crisis situations. Both the energy sector and the export taxes implemented by Commonwealth of Independent States countries appear to play a critical role in the overall economic impact of such a policy change. However, the fact that some countries, such as Argentina, would experience income losses due to such a policy change is a major challenge to overall positive reform in this area.

The Effects of Increasing Openness and Integration to the MERCOSUR on the Uruguayan Labor Market: A CGE Modeling Analysis

Uruguay is a small economy. Its integration into MERCOSUR has increased its exposure to regional macroeconomic instability. The aim of this paper is to assess the impact of regional integration on the countrys labour market and poverty. We estimated wage differentials between labour categories, finding a 60 percent wage gap between formal and informal workers. A CGE model with an efficiency wage specification for unskilled labour was built, with results showing that regional shocks deeply affect the Uruguayan economy. The consideration of an efficiency wage model is particularly important when shocks lead to a reallocation of resources towards sectors intensive in unskilled labour. A subsidy on formal, unskilled labour could contribute to decrease informality and therefore increase GDP, but this type of policy needs to be carefully implemented because it may have negative effects on investment. Finally, the effects on poverty and income distribution obtained through microsimulations are consistent with the results of the CGE experiments.

Trade Openness and Gender in Uruguay: A CGE Analysis

Survey results from Uruguay show that there is gender discrimination in the private labor market, and that women spend more time than men doing domestic work and less time in the labor market. We take these and other features of the survey into account to build a gender aware CGE model with endogenous labor supply and a home production function. This kind of model is a useful tool to evaluate the impact of different policies, in particular those relating to gender. In this paper we analyze the gender-differentiated impacts of trade openness in Uruguay on employment, wages and time allocation. We simulated different scenarios of tariff changes. Greater trade openness improved the situation of women in terms of employment and wages, but the impact on gender gaps depends on how trade openness affect trade flows. If net exports to Argentina increases, demand for female labor increases and the gender gap goes down. However, if net exports to Brazil and the rest of the world increase, unskilled male demand expands. When considering time distribution, the impact also depends on the elasticity of labor supply, which differs by skill.

Fighting Informality in Segmented Labor Markets A General Equilibrium Analysis Applied to Uruguay

As in other Latin American countries, labor informality in Uruguay mainly affects less educated workers, who are also more vulnerable to poverty. We analyze the impact of some policies against informality in Uruguay, applying a general equilibrium model with a segmented labor market specification. We simulate two sets of policies: payroll tax cuts and increased enforcement in the informal sector. Both sets of policies are effective in reducing informality, but the effect on poverty is not straightforward. Poverty falls as informality is reduced; however, as enforcement policies increase hiring costs for informal firms, wages of low-skilled workers decline and poverty increases.

Assessing the Impact of the Global Financial and Economic Crisis in Developing Countries: the Case of Uruguay

This paper uses a static computable general equilibrium model (CGE) linked to a microsimulation model to analyze how the global crisis and some adopted policy responses may have affected the Uruguayan economy. The focus is on the trade channel and foreign capital flows, since they are the most important mechanisms through which the global crisis affected the Uruguayan economy. The crisis had a strong impact on exports and fixed investment. Poorest households would be the most affected, as they face a stronger reduction in real wages and a rise in unemployment. We find a negative impact on extreme poverty, but not on moderate poverty, as households near the poverty line would benefit from the fall in some consumer prices. A policy based in increasing current public consumption does moderately counteract some negative impacts of the crisis, but benefits mainly skilled workers, and does not act directly towards the most affected.

Is MERCOSUR's External Agenda Pro-Poor? An Assessment of the European Union-MERCOSUR Free-Trade Agreement on Poverty in Uruguay Applying MIRAGE

In 2010, after several years of being stalled, negotiations between MERCOSUR (the Common Market of the Southern Cone) and the European Union (EU) to build a free-trade agreement (FTA) were resumed. This FTA is expected to have an important impact on MERCOSUR economies, especially if both blocs reach an agreement regarding the agricultural sector. This paper analyzes the impact of an FTA between MERCOSUR and EU, with a special focus on distributional impacts on Uruguay. For this we apply an improved version of MIRAGE (Modeling International Relationships in Applied General Equilibrium) with household heterogeneity. The representative agent in the standard version of the MIRAGE model is decomposed into a private and a public agent for all regions, and into a high number of households for Uruguay. Results show that a trade agreement between MERCOSUR and EU would have a significant impact on trade flows between both blocs. MERCOSUR economies would increase agriculture exports to EU and industrial imports from EU. Welfare increases in all countries participating in the agreement but is more pronounced for the two small countries of MERCOSUR: Paraguay and Uruguay. In Uruguay, welfare increases for different categories of households, but the richest households benefit the most. In spite of this, inequality decreases as a consequence of the agreement, and poverty rates decrease throughout the country.